Authors: Zhao Ying, Bao Yilong , Wall Street Insights
Amazon's stock price has fallen for nine consecutive days, marking its longest losing streak in nearly 20 years.
Amazon's stock price continued to decline on Friday after it entered a technical bear market on Thursday, becoming the second company in the Mag7 to fall into a bear market.
Investors strongly resisted the tech giants' aggressive AI spending plans, causing these star stocks to plummet.
On Friday, Amazon's stock closed at $198.79, down more than 23% from its recent high, after officially falling below the bear market threshold the previous Thursday.
Among the four major hyperscale cloud service providers, Amazon plans to have the highest capital expenditure in 2026, reaching $200 billion.
Amazon, Microsoft, Meta, and Alphabet are projected to spend a total of $650 billion on AI by 2026.
Meta may become the next Mag7 member to fall into a bear market. As of Friday's close, it had fallen 19.6% from its high last year, just 0.4% away from the 20% threshold for a bear market. Although Meta's fourth-quarter revenue and earnings exceeded Wall Street expectations, increased AI spending and profit margin pressures dampened investor confidence.
Microsoft became the first Mag7 member to enter a bear market. Its stock price fell into bear market territory on January 29 , the day before its Azure cloud business reported growth that missed investor expectations. By Friday's close, Microsoft's stock price was down 27.8% from its recent high.
(Trend charts for Amazon, Microsoft, and Meta over the past year)
Investors are rotating within Mag7, highlighting pressure on free cash flow.
Mike Treacy, VP of Risk at Apex Fintech Solutions, said the recent sell-off highlights the growing divide among Mag7 members.
Since last fall, investors have withdrawn from OpenAI deals involving Microsoft, Nvidia, and Oracle, and instead favored the Alphabet and Broadcom ecosystem.
Treacy noted that Alphabet's vertically integrated technology stack partially offset concerns about overspending, shielding the stock from the worst of the tech stock sell-off. Alphabet shares closed 9.2% below their recent high on Thursday.
Treacy argues that Google's self-sufficiency should command a premium relative to other companies that may be negatively impacted by certain links in the supply chain.
Amazon, Microsoft, and Meta shares suffered even greater losses as investors lacked confidence that these companies' AI spending would yield sufficient returns.
For Amazon, increased capital expenditures could turn its free cash flow negative this year, meaning the company will need to start entering the debt market to raise more capital.
Treacy believes the next major catalyst for AI deals will be Nvidia's earnings report on February 25th. This report will show whether the AI hype is cooling down, or whether Nvidia has successfully captured the billions of dollars its largest customer has invested in the field.
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